In recent days, attention has again focused on rising energy costs, including record breaking crude oil prices that have risen above $80 dollars a barrel. The increase in energy prices has refocused attention once again on the vital need to lower energy costs, cut oil consumption, and begin moving our country towards energy independence. Senate Democrats remain committed to enacting energy legislation that will provide the country with a more sustainable energy policy that will strengthen our national security, protect the environment, and take steps to reduce energy prices.

Oil Prices and Economic Impacts

"Though the effect of high oil prices on the U.S. consumer is a concern — especially given that the dollar is near record lows versus the Euro — the Fed tends to measure inflation with food and energy prices stripped out." (Associated Press, September 2007).

Price of a barrel of oil, September 25, 2007: $81.20

Price of a barrel of oil, September 25, 2006: $60.74

Price of a barrel of oil, September 25, 2001: $27.81

Percentage increase in price between September 25, 2006 and

September 25, 2007: 33.6%

Percentage increase in price between September 25, 2001 and

September 25, 2007: 192%

Highest closing price for a barrel of oil in nominal dollars, set on

September 20, 2007: $83.85

Inflation-adjusted high in real dollars, set in January 1981: $92.91

Percentage of the top five oil companies that are state-owned: 100%

Percentage of world’s known oil reserves located within the United States: 3%

"It is often said that 9/11 changed everything! Sadly, in the area of energy policy it has not changed very much. American oil vulnerability continues unabated." (Goldman Sachs International, January 2007).

Estimated number of barrels of oil saved each day in 2020 as a result of

Senate-passed CAFE reforms: 1.2 million

Estimated number of barrels of oil saved each day as a result of

Senate-passed energy bill: 3.5 million

Oil Profits

“I’m not remotely embarrassed about it (the company’s oil profits). I am proud of what we do as a company.” Peter J. Robertson, Vice Chairman, Board of Directors, Chevron (Aspen Ideas Institute, July 2007).

Amount of profits the five largest oil companies made in 2006: $117.6 billion

Amount of profits the five largest oil companies made in 2001: $44.656 billion

Percent increase since 2001: 163%

Amount ExxonMobil has invested in non-petroleum energy

supply and production: Negligible

Amount invested by oil companies in non-hydrocarbon energy

between 2000 and 2005: $1.2 billion

Number of Republican Senators who voted against revoking unneeded

and unwanted tax subsidies for the major oil companies: 34

Amount Senate Democrats want to invest from unneeded and unwanted

major oil company profits into advanced vehicle technologies (like plug-in

hybrid electric vehicles): $1.54 billion

Amount Senate Democrats want to invest from unneeded and unwanted

major oil company profits into biofuels (like celluloisic ethanol and

biodiesel): $4.16 billion

Gasoline Prices

"I think we are going to see higher prices this summer than we saw last summer, and I would not have said that a month ago, but I am saying it now." (Secretary Bodman, May 2007).

Retail price of a gallon of regular gasoline, September 24, 2007: $2.81

Retail price of a gallon of regular gasoline, September 25, 2006: $2.38

Retail price of a gallon of regular gasoline, January 2001: $1.47

Percentage increase in price between January 2001 and September 24, 2007: 91%

Percentage increase in price between September 25, 2006 and September

24, 2007: 18.1%

Highest price for gasoline in 2007: $3.22

Inflation-adjusted highest price for a gallon of gasoline, set in 1981: $3.31

Average gasoline price this summer: $3.05

Average gasoline price last summer: $2.94

Average gasoline price in the summer of 2001: $1.49

Percentage increase in gasoline costs for from the summer of 2001 to

the summer of 2007: 105%

Weeks in 2001 when the price of gas was at least $2 per gallon: 0

Weeks in 2005 when the price of gas was below $2 per gallon: 10

Weeks in 2007 when the price of gas was at least $2 per gallon: 30

Transportation Fuel Costs

"Higher gas prices are likely to impact low-income workers more because they are less capable of making adjustments." (USA Today, June 2007).

Estimated transportation fuel costs for 2007: $3,109

Estimated transportation fuel costs in 2006: $2,937

Estimated transportation fuel costs in 2001: $1,623

Percent of households with children in 2001 that spent more than

$2,000 dollars on motor fuel expenditures: 13.5%

Average annual expenditures on gasoline and motor oil in 2001: $1,279

Average annual expenditures on gasoline and motor oil in 2005 $2,033

Percent increase in annual expenditures on gasoline and motor oil between

10. According to economists at the Federal Reserve Board and the Universities of Kent and Warwick in the United Kingdom, a 10 percent increase in the price of oil will likely increase the unemployment rate by 0.1 percent over the course of the following year. According to the Bureau of Labor Statistics, there are currently 151,000,000 non-farm payroll employees in the United States. Therefore, a 0.1 percent increase in unemployment means a loss of 151,000 jobs. Source: Alan Carruth, Mark Hooker, and Andrew Oswald, “Unemployment Equilibria and Input Prices: Theory and Evidence from the United States,” The Review of Economics and Statistics, v. 80, n. 4, 1998, p. 621.

11. CRS Report RL31608, The Effects of Oil Shocks on the Economy: A Review of the Empirical Evidence. (January 18, 2006) A survey of relevant literature conducted by CRS, a 10% oil price increase reduces GDP growth by 0.4-0.6 p.p. over the next two years. According to the Bureau of Economic Analysis, U.S. GDP in 2005 and 2006 was a combined $25.627 trillion. Therefore, a 0.4% to 0.6% reduction over that time period would result in an economic drop between $102 and $153 billion.

12. United States Department of Agriculture: Economic Research Service and University of California Santa Cruz, LeBlanc, Michael and Chinn, Menzie, “Do High Oil Prices Presage Inflation,” February 19, 2004.

3. Calculated from 2006 financial reports for ExxonMobil, BP, Royal Dutch Shell, ConocoPhillips, and ChevronTexaco as well as 2001 financial reports for ExxonMobil, BP, Royal Dutch Shell, ConocoPhillips, and ChevronTexaco.

4. ExxonMobil response to Questions from the Record of Joint Committee Hearing regarding Energy Pricing and Profits on November 9, 2005 with Senate Energy and Natural Resources and Commerce, Science, and Transportation Committees.